Policy Update: 2023 – 2024 California Budget Proposal – Housing at the Forefront, but Questions Remain

In January, Governor Gavin Newsom released a draft budget for the 2023-2024 fiscal year, which would include modest investments in housing production and homelessness prevention but also makes cuts to existing funding sources. Now, the state legislature is working to revise and pass the budget by June 15, 2023.  From Mercy Housing California (MHC)’s perspective, the budget is a decent start but does not go quite far enough to address California’s housing and homelessness crises.

One state-level program that MHC has found to be especially effective is the California Housing Accelerator Fund, managed by the Department of Housing and Community Development (HCD). This program provides funding to developments that are “shovel ready” in terms of design, plans, and land entitlements but don’t have enough money to proceed with construction. The Governor’s 2023-2024 proposal would reduce HCD’s budget by around 60%, which would limit the power of this effective program and others. Affordable housing advocates hope the legislature will revise this reduction and empower HCD to support more housing production.

In terms of homelessness, the proposed budget earmarks around $2 billion in prevention and response efforts such as tiny home installation and rehousing strategies for people living in encampments.  A recent report suggested that California would need to spend more than $8 billion per year on homelessness prevention until 2035 to end the crisis entirely. In response to the proposed budget, affordable housing advocates have suggested greater investment in California’s Homeless Housing, Assistance, and Prevention Program, as well as funds to prevent displacement and preserve affordable homes.

Finalizing the state budget is always a matter of weighing many competing needs. While advancing housing justice may seem like just one out of many worthy priorities, research has shown that it is one of the most cost-effective uses of state funds. Investments in affordable housing create well-paying construction jobs, ease pressure on housing costs, and improve public health. MHC will continue to collaborate with our partners in the Governor’s office and state legislature to help meet California’s need for quality, affordable homes.